Morongo Band Urges Federal Court to Hear California Compact Challenge

The Morongo Band of Mission Indians is asking a federal court in California to reject the state's bid to end its challenge to payment provisions in the band's 2018 Class III gaming compact. According to a Law360 report published October 27, 2026, Governor Gavin Newsom has moved to dismiss the case, and the band has filed papers opposing that motion. The Morongo compact challenge, filed in May 2025 in the U.S. District Court for the Central District of California, remains one of the more closely watched disputes over how much states may require tribes to pay under IGRA compacts.

The procedural posture matters. A motion to dismiss tests whether the complaint, taken as true, states a claim a court can resolve; it does not decide who is right. The court has not ruled on the merits of the band's arguments, and nothing in the public record reviewed for this article indicates how or when the judge will rule.

What the Morongo Band says it is paying

Under the 2018 compact, as the band describes it in its complaint, Morongo makes payments into several state-administered funds. The Law360 summary quotes the band as saying it has "paid millions of dollars into four funds" and faces paying much more over the next 16 years. Legal commentary on the filing, including a May 2025 analysis by the law firm Snell & Wilmer, lays out the funds at issue: the Special Distribution Fund, the Revenue Sharing Trust Fund, the Tribal Nation Grant Fund, the Rainy Day Fund and the Local Community Benefit Fund.

The complaint, as summarized in that commentary, argues that required Special Distribution Fund contributions exceed the state's actual and reasonable regulatory costs. It also alleges that the Revenue Sharing Trust Fund payments rose roughly 450 percent between the 2006 and 2018 compacts without a meaningful concession from the state, and that the legislature's transfer of excess trust-fund money into the Tribal Nation Grant Fund amounts to an unauthorized fee or tax. These are the band's allegations, and the state has not conceded them.

For readers new to the California system, the revenue sharing trust fund explainer describes how payments from compact tribes are distributed to tribes without Class III gaming, and the local impact mitigation funds explainer covers the community-benefit side of the structure.

The legal theory behind the Morongo compact challenge

At the center of the complaint is a reading of the Indian Gaming Regulatory Act. IGRA lists the subjects a tribal-state compact may address, and the band argues, relying on the Ninth Circuit's 2022 decision in Chicken Ranch Rancheria v. California, that the list is exhaustive. On that reading, a compact provision that does not directly relate to the operation of Class III gaming is outside what IGRA permits, and a state payment demand beyond the cost of regulation is a tax or fee that the statute forbids states from imposing.

The complaint also invokes the Ninth Circuit's 2010 decision in Rincon Band v. Schwarzenegger, in which the court treated a state's demand for revenue directed to its general fund as evidence of bad-faith negotiation unless the state offered meaningful concessions in return. The band contends that several of its payment obligations were imposed rather than negotiated and that the exclusivity benefits it received in 2018 do not justify them. Among the relief it seeks are declarations that the disputed provisions are unenforceable, an accounting of the state's actual regulatory costs, and an injunction against enforcing the contested terms.

The state's motion to dismiss, as reported, asks the court to throw out the case before reaching those questions. Law360's excerpt does not set out the state's arguments, which in cases of this kind commonly turn on threshold issues such as whether the claims are properly brought, whether the band can obtain the relief it seeks, and whether the compact's own terms limit the challenge. Readers should not assume which of those grounds the state has raised without reviewing the filings.

Why other tribes and states are watching

Compact payments are among the largest line items in the budgets of established California gaming tribes, and the questions raised in the Morongo case are not unique to one band. Other disputes have probed similar territory, including a challenge to a revenue provision examined in the Santa Ynez revenue provision analysis. A ruling that narrows or confirms the reach of IGRA's permitted-subjects list could shape how future compacts are drafted in California and in other states that rely on revenue-sharing and community-fund structures.

The broader trend line is visible in recent compacts. As the revenue-sharing retreat analysis notes, several recent agreements have moved away from percentage-of-revenue payments, a shift that reflects the pressure the Rincon line of cases has placed on state negotiators. Whether the Morongo litigation reinforces or limits that trend depends on how the district court, and potentially the Ninth Circuit, answers the exhaustive-list question.

The band is among the best-known operators in the state, and its enterprise is profiled on the site in the Morongo enterprise profile. For a state-by-state view of the compacts that frame these disputes, see the California state hub and the Legal Guide.

What to watch next

With briefing on the motion to dismiss now framed by the band's opposition, the next step is typically a reply from the state and then either a hearing or a ruling on the papers. If the court denies the motion in whole or part, the case would move toward discovery and merits briefing on the regulatory-cost and concession questions. If it grants the motion, the band could seek leave to amend or appeal. Either way, the outcome will be reported here once the court issues an order.

Evenhanded coverage requires one more note: the state has historically defended its compact structure as the product of negotiated, voluntary agreements in which tribes received substantial exclusivity in exchange for their commitments. That position will presumably be developed in the state's own filings, and the band's characterization of the compact in its complaint should be read alongside it.